Uranium Development & Exploration

Transcription

1 Uranium Development & Exploration The Athabasca Basin, Northern Saskatchewan September 2018 Investor Update

2 Cautionary Statements & References Cautionary Statements: This presentation includes forward-looking information or forward-looking statements under Canadian and U.S. securities laws that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause differences may include: the speculative nature of exploration and development projects, the failure of Denison to realize benefits from transactions, Denison s inability to expand and replace its mineral reserves and resources and the imprecision of mineral reserves and resources estimates, the impact of volatility in uranium prices on the valuation of mineral reserves and resources and the market price of Denison s shares, unexpected development and operating risks, delays in obtaining permits and licenses for development properties, reliance on other operators and partners, and uncertainty surrounding Denison s successful completion of exploration plans, timely completion economic analyses (including a PEA or PFS), the ability to reach revenue targets, and the ability to operate within budget. In addition, we have made assumptions in drawing the conclusions contained in these statements, including assumptions regarding future demand for uranium, production levels and costs, mining conditions, relationships with partners, and our ability to continue our operations without any significant disruptions. Additional information about the material factors that could cause the results to differ materially, and the material assumptions we have made, are contained in our current Annual Information Form and our current annual MD&A, which are available on SEDAR. Forward-looking information is designed to help you understand management s current views of our near and longer-term prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws. This presentation may use the terms measured", indicated, inferred" and historical mineral resources. U.S. investors are advised that, while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. Inferred mineral resources" and historical estimates have a great amount of uncertainty as to their existence and great uncertainty as to their economic feasibility. It cannot be assumed that all or any part of an inferred mineral resource or a historical estimate will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. Further, historical estimates are not recognized under Canada s NI U.S. investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted to mineral reserves. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Technical Reports: McClean Lake: Technical Report on the Denison Mines Inc. Uranium Properties, Saskatchewan, Canada, dated November 21, 2005, as revised February 16, 2006, by Richard E. Routledge, M.Sc., P. Geo of Scott Wilson RPA (now RPA Inc.) McClean Lake - Sue D: Technical Report on the Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada, dated March 31, 2006, by Richard E. Routledge, M.Sc., P. Geo. and James W. Hendry, P. Eng of Scott Wilson RPA (now RPA Inc.). McClean Lake McClean North: Technical Report on the McClean North Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada, dated January 31, 2007, by Richard E. Routledge, M.Sc., P. Geo. and James W. Hendry, P. Eng of Scott Wilson RPA (now RPA Inc.), and subsequent revision by letter dated October 20, 2009 from Scott Wilson RPA. Midwest: Technical Report with an Updated Mineral Resource Estimate for the Midwest Property, Northern Saskatchewan, Canada, dated March 26, 2018, by Dale Verran, MSc, P.Geo, Pr.Sci.Nat. and Chad Sorba, P.Geo, of Denison Mines Corp. and G. David Keller, PGeo, and Oy Leuangthong, PEng, of SRK Consulting. Waterbury Lake: Mineral Resource Estimate On The J Zone Uranium Deposit, Waterbury Lake Property, dated September 6, 2013, by Allan Armitage, Ph.D., P.Geo, and Alan Sexton, M.Sc., P.Geo of GeoVector Management Inc. Wheeler River: Technical Report with an Updated Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada, dated March 15, 2018, by Mr. Mark Mathisen, C.P.G. of Roscoe Postle Associates Inc. ( RPA ) and Mr. Ken Reipas, P.Eng of SRK Consulting (Canada) Inc. The report includes the Preliminary Economic Analysis completed March All Technical Reports are available on SEDAR at 2

3 Diversified Athabasca Basin Asset Base with Superior Development Leverage Strategic Project Portfolio: 63.3% interest in Flagship Wheeler River project largest undeveloped uranium project in infrastructure rich eastern Athabasca Basin 22.5% interest in operating McClean Lake Uranium Mill 6M lbs U 3 O 8 excess licensed capacity, +12% of global uranium production Interests in uranium resources at McClean Lake, Midwest, and Waterbury Lake ~320,000 hectares of prospective exploration ground in the Athabasca Basin Internal sources of cash flow from management of Uranium Participation Corp. (TSX-U), and Denison Environmental Services (DES) 3

4 ~320,000 Hectares of Prospective Exploration Ground Focused in the Infrastructure Rich Eastern Athabasca Basin Denison Land Position as of June 30, 2018 Waterbury (Denison 64.2%) McClean Lake Mill (Denison 22.5%) Hook-Carter (Denison 80%) Cigar Lake Mine Rabbit Lake Mill McArthur River Mine Wheeler River (Denison 63.3%) Key Lake Mine & Mill All Season Highway / Haul Road Provincial Power Grid 4

5 The Infrastructure Rich Eastern Athabasca Basin Existing infrastructure supports mining operations in proximity of Wheeler River: 4 licensed uranium mines (Cigar Lake, McArthur River, Eagle Point, McClean) + 3 licensed uranium mills (McClean, Key, Rabbit) Provincial power grid reliable, cost efficient, ability to power operation without emissions from / reliance on diesel fuel generators Existing Provincial highways / haul roads allows for transport of supplies, personnel, mine production, and finished goods Precedents set with local stakeholders Reduced risk and expectation of shorter timelines for regulatory approval 5

6 Flagship Wheeler River Uranium Project Potential to be a Top-5 producing uranium mine Top Producing Uranium Mines 2017 est. vs. Wheeler PEA Production Plan (1)(2) 18 M lbs M lbs Source: UxC Uranium Market Outlook Q Million Pounds U 3 O M lbs. 9.6 M lbs. 7.3 M lbs. 6.6 M lbs. 6.3 M lbs. 5.8 M lbs. 5.5 M lbs. 5.5 M lbs (1) IMPORTANT CAUTION REGARDING THE PRELIMINARY ECONOMIC ASSESSMENT ( PEA ): The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic value. See Press Release dated April 4, 2016 and Technical Report filed on SEDAR and EDGAR: Technical Report with an Updated Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada, dated March 15, 2018, by Mr. Mark Mathisen, C.P.G. of Roscoe Postle Associates Inc. ( RPA ) and Mr. Ken Reipas, P.Eng of SRK Consulting (Canada) Inc. The report includes the Preliminary Economic Analysis completed March (2) Based on Wheeler River average annual production (100% basis) per PEA 6

7 Flagship Wheeler River Uranium Project Poised to be the next uranium development project in the Athabasca Basin Project Development Scorecard Wheeler River Ranking (1) Ownership of licenced mill with excess capacity Proximity to infrastructure Denison owns 22.5% of McClean Lake Mill Provincial power line and highway on property 1st 1st Estimated resources in M&I category 132M lbs U 3 O 8 2nd Degree of confidence in estimated resources 97% of total resources in M&I 1st Overall Grade on existing M&I resources 3.3% U 3 O 8 2nd Estimate of CAPEX required to build (2) (Lowest) CAD $560M 1st Timeline to Pre-Feasibility Study (3) (Shortest) By end of Q st NOTES: (1) Rankings are based on comparison of undeveloped uranium projects (at 100% ownership) with total indicated resources greater than 40M lbs U 3 O 8, located in the Athabasca Basin region namely Arrow (NexGen Energy Ltd.), Triple R (Fission Uranium Corp.), Millennium (Cameco, JCU), Shea Creek (Orano, UEX Corp.), Midwest (including the Midwest and Midwest A deposits) (Orano, Denison, OURD). All numbers used in comparisons have been taken from corporate presentations, technical reports, website disclosure and/or news releases available on their respective websites or SEDAR. (2) CAPEX estimates are per NI technical reports. Certain projects do not have NI estimates of upfront capital costs. (3) Timeline to feasibility is based on company disclosures / guidance. 7

8 Flagship Wheeler River Uranium Project Largest Undeveloped High-Grade Uranium Project in Eastern Athabasca Our strategy involves the advancement of our flagship Wheeler River project towards development and production intending to claim the pole position as the next new uranium mine to be built in Canada David Cates, President & CEO Combined indicated resources of 132.1M lbs U 3 O 8 (1,809, % U 3 O 8 ) Phoenix: Zone A high-grade core estimated to contain 62,900 tonnes at 43.2% U 3 O 8 for 59.9M lbs U 3 O 8 Jan. 10, 2017 announced agreement to fund 75% of JV expenditures in 2017 and 2018 to increase ownership from 60% to ~66% Exploration activities transitioning back to discovery focus Ownership (2017): 63.3% Denison, 26.7% Cameco, 10.0% JCU Deposit Class. Tonnes Grade Lbs U 3 O 8 Denison Share* Phoenix Indicated 166, % U 3 O M 44.4M Gryphon Indicated 1,634, % U 3 O M 39.2M Phoenix Inferred 9, % U 3 O 8 1.1M 0.7M Gryphon Inferred 73, % U 3 O 8 1.9M 1.2M Notes: (1)The Mineral Resource estimates were prepared for the Company by RPA Inc. in accordance with CIM Definition Standards (2014) and NI , (2) Mineral Resources for the Phoenix and Gryphon deposit are reported above a cut-off grade of 0.8% U3O8 and 0.2% U3O8 respectively. Source: Technical Report with an Updated Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada, dated March 15, 2018, by Mr. Mark Mathisen, C.P.G. of Roscoe Postle Associates Inc. ( RPA ) and Mr. Ken Reipas, P.Eng of SRK Consulting (Canada) Inc. The report includes the Preliminary Economic Analysis completed March

9 Flagship Wheeler River Uranium Project History of Exploration Success & Resource Growth Mineral Resource Estimate: 97% of Total Mineral Resources classified as Indicated Million Pounds U 3 O Indicated U3O8 Mlbs Inferred U3O8 Mlbs (1) Mineral resources are not mineral reserves and do not have demonstrated economic value. See Press Releases dated April 4, 2016 and January 31, 2018, as well as the Technical Report filed on SEDAR and EDGAR Technical Report with an Updated Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada, dated March 15, 2018, by Mr. Mark Mathisen, C.P.G. of Roscoe Postle Associates Inc. ( RPA ) and Mr. Ken Reipas, P.Eng of SRK Consulting (Canada) Inc. The report includes the Preliminary Economic Analysis completed March

10 Flagship Wheeler River Uranium Project 2016 PEA (1) : 2 Phase Development US$44/lb U 3 O % Pre-Tax US$44/lb U 3 O 8 CAD$560M (100%) Initial CAPEX Avg. USD$19.01/lb U 3 O 8 OPEX CAD$1.4B US$62.60/lb U 3 O 8 Phase 1 - Gryphon Conventional underground mining USD $14.28/lb U 3 O 8 est. OPEX 6M lbs U 3 O 8 / year 1 7 Years Phase 2 - Phoenix U/G freezing + Jet Bore mining USD $22.15/lb U 3 O 8 est. OPEX 2016 PEA has not been updated for 2018 resource estimate or new mining method selected for Phoenix 7M lbs U 3 O 8 / year 1 9 Years (1) IMPORTANT CAUTION REGARDING THE PRELIMINARY ECONOMIC ASSESSMENT ( PEA ): The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic value. See Press Release dated April 4, 2016 and Technical Report filed on SEDAR and EDGAR: Technical Report with an Updated Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada, dated March 15, 2018, by Mr. Mark Mathisen, C.P.G. of Roscoe Postle Associates Inc. ( RPA ) and Mr. Ken Reipas, P.Eng of SRK Consulting (Canada) Inc. The report includes the Preliminary Economic Analysis completed March

11 Wheeler River PEA Assumes Processing at 22.5% Denison owned McClean Lake Mill (1) Processes +12% of global uranium production: Operating under 10-year license granted by Canadian Nuclear Safety Comm. in 2017 Licensed for 24M lbs U 3 O 8 annual production 18M lbs U 3 O 8 /year reserved for Cigar Lake Joint Venture under tolling agreement. 6M lbs U 3 O 8 /year excess licensed capacity Positive metallurgical test results for Wheeler River s Phoenix and Gryphon deposits Ownership: 22.5% Denison, 70% Orano (formerly Areva ), 7.5% OURD (1) See IMPORTANT CAUTION REGARDING PEA on slide 2 11

12 Diversified Asset Base with Company Specific Catalysts on the Horizon Wheeler River Drilling Program Wheeler River Pre-Feasibility Study Exploration Pipeline Projects SABRE Mining Method Q1 to Q Completed 21,153 metre drill program during the winter, resulting in the discovery of highgrade uranium mineralization 600m & 1km NE of the Gryphon deposit. A 24,000 metre summer program is in progress as part of the 45,500 metre drilling program planned for Q The PFS is expected to build on the previously released 88% increase in estimated indicated mineral resources at Wheeler River, and introduce a new mining method for the Phoenix deposit together having the potential to enhance the already strong economics of the project. Winter & Summer 2018 ~23,000 metres of exploration drilling completed on exploration pipeline projects through mid-july Currently primarily focused on the Hook-Carter and Waterbury Lake properties Test Mine Design, procurement, and fabrication of SABRE mining equipment, as well as drilling and casing of test mining holes to the top of the McClean North orebody ahead of test mining activities planned for CAD$9.5M Budget (CAD$7.1M Denison) CAD$3.6M Budget (CAD$2.7M Denison) CAD$6.4M Budget (Denison s Share) CAD$17.6M Budget (CAD$4.0M Denison) 12

13 Appendix: Diversified Project Portfolio Project Profiles 13

14 McClean Lake Uranium Project Processing Plant Licensed for Annual Production of 24M lbs U 3 O 8 (the APG) financing allows Denison to benefit immediately from the cash flow expected to be produced from the McClean Lake mill over the next several years, without the overhang of a bullet payment or convert at the end of a debt, and without selling its stake in the mill David Cates, President & CEO Processing ~18M lbs U 3 O 8 /year from Cigar Lake mine Cigar Lake toll milling cash flows monetized in transaction with Anglo Pacific Group ( APG ) in 2017 for $43.5M Operating license renewed for 10-year period by CNSC in 2017 Ownership: 22.5% Denison, 70.0% Orano, 7.5% OURD Deposit Class. Tonnes Grade Lbs U 3 O 8 Denison Share McClean North Indicated 205, % U 3 O M 2.8M Caribou Indicated 47, % U 3 O 8 2.8M 0.6M Sue D Indicated 122, % U 3 O 8 2.8M 0.6M Sue E Inferred 483, % U 3 O 8 7.3M 1.6M Notes: (1) The Mineral Resource estimates were prepared for the Company by Scott Wilson RPA (now RPA Inc.) in accordance with CIM Definition Standards and NI , (2) Mineral Resources are reported above a cut-off grade of 0.1% U 3 O 8. Sources: Technical Report on the Denison Mines Inc. Uranium Properties, Saskatchewan, Canada, dated November 21, 2005, as revised February 16, 2006, by Richard E. Routledge, M.Sc., P. Geo of Scott Wilson RPA (now RPA Inc.); Technical Report on the Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada, dated March 31, 2006, by Richard E. Routledge, M.Sc., P. Geo. and James W. Hendry, P. Eng of Scott Wilson RPA (now RPA Inc.); Technical Report on the McClean North Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada, dated January 31, 2007, by Richard E. Routledge, M.Sc., P. Geo. and James W. Hendry, P. Eng of Scott Wilson RPA (now RPA Inc.), and subsequent revision by letter dated October 20, 2009 from Scott Wilson RPA. 14

15 Midwest Uranium Project Significant Increase in Mineral Resources with Updated Estimate With the application of more rigorous and robust estimation procedures, in accordance with NI , we are pleased to see a significant increase in overall project resources, without additional recent drilling. Dale Verran, VP Exploration Mineral resource estimate updated in March kilometres by existing roads to the McClean Lake mill Environmental Impact Statement ( EIS ) approved in 2012 Ownership: 25.17% Denison, 69.19% Orano, 5.67% OURD Deposit Class. Tonnes Grade Lbs U 3 O 8 Denison Share Midwest Indicated 453, % U 3 O M 10.1M Midwest Inferred 793, % U 3 O M 2.9M Midwest A Indicated 566, % U 3 O M 2.7M Midwest A Inferred 53, % U 3 O 8 6.7M 1.7M Notes: (1) The Mineral Resource estimate was audited for the Company by SRK Consulting in accordance with CIM Definition Standards (2014) and NI , (2) Mineral Resources for the Midwest Main and Midwest A deposits are reported above a cut-off grade of 0.1% U 3 O 8. Source: Technical Report with an Updated Mineral Resource Estimate for the Midwest Property, Northern Saskatchewan, Canada, dated March 26, 2018, by Dale Verran, MSc, P.Geo, Pr.Sci.Nat. and Chad Sorba, P.Geo, of Denison Mines Corp. and G. David Keller, PGeo, and Oy Leuangthong, PEng, of SRK Consulting. 15

16 Waterbury Lake Uranium Project Mineral Resources in Close Proximity to Roughrider & McClean Lake The high-grade mineralization at Huskie appears to be controlled by the intersection of east-west striking faults, associated with the graphitic gneiss unit, and cross-cutting northeast striking faults, possibly related to the regional Midwest structure. Dale Verran, VP Exploration Host to J-Zone and Huskie deposits Adjacent to Rio Tinto s Roughrider project and Denison s Midwest project Over 40,000 hectares of ground Ownership: 65.45% Denison, 34.55% KHNP Deposit Classification Tonnes Grade Lbs U 3 O 8 Denison Share J-Zone Indicated 291, % U 3 O M 8.M Huskie Not Estimated n/a n/a n/a n/a Notes: (1) The J Zone Mineral Resource estimate was prepared for the Company by GeoVector Management Inc. in accordance with CIM Definition Standards (2005) and NI , (2) Mineral Resources for the J Zone deposit are reported above a cut-off grade of 0.1% U 3 O 8. Source: Mineral Resource Estimate On The J Zone Uranium Deposit, Waterbury Lake Property, dated September 6, 2013, by Allan Armitage, Ph.D., P.Geo, and Alan Sexton, M.Sc., P.Geo of GeoVector Management Inc. 16

17 Hook-Carter Uranium Project Exploration on the Patterson Lake Corridor in the Western Athabasca Basin "This is Elephant country - a large property that has seen very little drilling on a geological trend with a precedent for large and highgrade uranium deposits. Dale Verran, VP Exploration 15 km of relative untested ground on the Patterson Lake Corridor Reconnaissance drill program completed in 2018 Designed to generate targets for further exploration drilling in 2019 Ownership: 80% Denison, 20% ALX 17

18 SABRE Mining Method Experimental Mining Method with Potential to Access Orebodies from Surface Surface Access Borehole Resource Extraction or SABRE for short is a proprietary mining method designed to excavate underground material from surface using a water jetting process +CAD$50M invested for development including engineering, drilling, mining tests, and procurement Recently re-designed key SABRE equipment to improve performance and economics with a new mining test slated to occur Potential benefits include low CAPEX, scalability, reduced timelines, and minimal environmental impact Ownership: 22.5% Denison, 70.0% Orano, 7.5% OURD 18

19 Appendix: 2016 Wheeler River Preliminary Economic Assessment 19

20 Appendix: 2016 Wheeler River Preliminary Economic Assessment (1) Assumptions Base Case Production Case Uranium Price US$44.00 US$62.60 Exchange Rate (CAD:USD) Discount Rate 8.00% 8.00% Financial Results Highlights Base Case CAD$ Initial Capital Costs (100%) $560M Initial Capital Costs (Denison) (4) $336M Sustaining Capital Costs (100%) $543M Sustain. Capital Costs (Denison) (4) $326M Production Case Pre-Tax IRR (2) 20.4% 34.1% Pre-Tax NPV (2) (100%) CAD$513M CAD$1.4B Payback Period (3) ~3 years ~18 months Average Operating Costs per lb U 3 O 8 $25.67 (USD$19.01) Capital Costs (CAD$ millions) Initial Sustain. Total Surface Infrastructure $166 $7 $174 Mine $220 $334 $554 Mineral Processing $19 $60 $79 Owners Costs $25 $0 $25 Decommissioning $0 $40 $40 Subtotal $429 $442 $871 Contingency $131 $101 $232 Total (100%) $560 $543 $1,103 Operating Costs (CAD$/lb U 3 O 8 ) Gryphon Phoenix Mining $3.45 $17.45 Surface Transportation $1.63 $0.85 Processing (including tolling) $10.03 $8.03 General & Administration $4.17 $3.57 Total (CAD$/lb U 3 O 8 ) $ Total (USD$/lb U 3 O 8 ) $14.28 $22.15 (1) See IMPORTANT CAUTION REGARDING PEA on slide 2 (2) NPV and IRR are calculated to the start of pre-production activities in (3) Payback period is stated as number of years to pay-back from the start of commercial production. (4) Based on DML s ownership of 60% at time of PEA (current ownership of 63.3%) 20

21 Capital Structure & Corporate Information Exchanges Shares Outstanding Warrants Options Fully Diluted Shares Market Summary (1) TSX: DML, NYSE MKT: DNN M 1.7 M 17.5 M M Management & Directors David Cates (President & CEO, Director) Mac McDonald (VP Finance & CFO) Peter Longo (VP Project Development) Dale Verran (VP Exploration) Market Cap C$0.64/share (2) Daily Trading Volume DML (3) Market Cap U$0.49/share (2) Daily Trading Volume DNN (3) CAD $352.3 M 0.53 M Shares USD$268.2 M 0.50 M Shares Catherine Stefan (Non-Executive Chair) W. Robert Dengler (Director) Brian D. Edgar (Director) Ron F. Hochstein (Director) Jack Lundin (Director) William A. Rand (Director) Moo Hwan Seo (Director) Patricia M. Volker (Director) Website: info@denisonmines.com (1) As of August 9 th, 2018 per Denison s Q Report (2) Based on shares outstanding above and DML/DNN share prices as of August 9 th, 2018 (3) Average daily trading volume over 90 day period as at June 11 th,